When SoftBank Group Corp. made a last ditch-infusion of $440 million into Greensill Capital last November, the money was earmarked to pay off investors in Credit Suisse Group AG investment funds, according to people familiar with the deal.
But the cash never made it to the Swiss bank. Greensill put the money into its own German banking unit instead, according to a report released Thursday from the bankruptcy administrators for Greensill’s Australian parent company and some of the people familiar with the deal.
Both Credit Suisse and Softbank are supposed to be the adults here…..
Last reckoning I saw German municipalities are out of pocket to the tune of €450m and that was a few weeks ago. Looks like their local government is as crap as our own.
German municipalities and their pet banks are famous worldwide for buying weird rubbish. Pretty much any blow-up you can expect a German or Austrian to be carrying part of the can.
“The incident shows the challenge in unraveling Greensill’s complicated web of transactions & how Greensill moved funds around to plug holes in its operations”
In other words, Greensill was a Ponzi operation. But because no money was stolen from the People, no one will go to jail……unlike Madeoff B
“Both Credit Suisse and Softbank are supposed to be the adults here…..”
Then how to explain the near incredible pay packets that bankers get at the likes of Credit Suisse?
Softbank making an investment in a business seems to be a cast-iron guarantee the business is a Grade A pup, if not an outright fraud.
ARM wasn’t so bad – I doubt that they took any dividends out, but the average annual return was in the 6% range. Not great, but ARM is hardly a dog. Other than that, I can’t think of a good investment by Softbank aside from Alibaba – and I attribute that to luck, not talent.
Softbank making an investment in a business seems to be a cast-iron guarantee the business is a Grade A pup, if not an outright fraud.
I guess you mean WeWork? It does seem that way, but I suspect we read more about the bad bets. For example, Softbank invested $1bn in Coupang, a Korean online shopping platform, in 2015. Coupang IPOd this year and is now valued at $100bn, with Softbank owning 35%.
The Vision fund does seem to be making money too.
@Dcardno and Jim
MC beat me to Coupang. Softbank originally made money in Yahoo Japan and then in Japan Telecom. They did poorly in their investment in Sprint, and as you note did well in Alibaba. There have been other dogs in the Vision fund, such as Wag (seriously?) and some of the others look dodgy.
https://www.nytimes.com/2019/12/10/business/softbank-wag.html
IIRC correctly they were also invested in Uber. While they are making money, it’s highly leveraged – the vision fund itself is leveraged with bank debt and the target companies have also taken on debt – as seen in the case TW is talking about. A big chunk of the quite high valuations in venture capital is down to Softbank throwing such large amounts of money around. It could yet go wrong because of the leverage and the possibility that some of these valuations unwind.
“I attribute that to luck, not talent.” But almost all investment success is due to luck, not talent. That’s why people end up investing in Vanguard trackers. Because the investment management business is, to a good approximation, a huge fraud.